Iran Billionaire Who Helped Iran Skirt Sanctions Through “PetroGold” Scheme Sentenced To Death

Two months back, in a series of lengthy exposes (see here and here), we profiled the ins and outs of the “petrogold” trade that allowed Iran to skirt international sanctions that froze Tehran out of the banking system by way of conduits and shady go-betweens in Turkey and Dubai.

The tale is long and winding and should probably be adapted for the silver screen, but really, the mechanics were pretty simple. Couriers simply carried briefcases full of bullion through Istanbul’s Ataturk Airport and flew to Dubai where the gold was then carted off to Iran.

The Dubai intermediary became necessary because gold exports to then-pariah state Iran were becoming too suspicious. Here’s a bit from Reuters ca. 2012 that details the switch: “Turkey exported a total $2.3 billion worth of gold in August, of which $2.1 billion was gold bullion. Just over $1.9 billion, about 36 metric tons, was sent to the UAE, latest available data from Turkey’s Statistics Office shows. In July Turkey exported only $7 million of gold to the UAE. At the same time Turkey’s direct gold exports to Iran, which had been fluctuating between $1.2 billion and about $1.8 billion each month since April, slumped to just $180 million in August.”

Eventually the world came to know who the people on the Turkish side of the deal were and unsurprisingly the connections went all the way to the top including Turkey’s then-economy minister, Zafer Caglayan and Erdogan himself (wouldn’t you know it). Finally, in July of 2013, the U.S. added precious metals to the list of items that couldn’t be sold to Iran as part of an effort to curtail the country’s nuclear enrichment program.

Party over.

We went on to identify the Dubai middleman involved in the trade and looked into his company Gold AE where, ultimately, all of the gold held on behalf of clients simply disappeared. You’re encouraged to read the entire series linked above, but what’s notable today is that the Iranian side of the business, billionaire Babak Zanjani was just sentenced to death in Iran.

You may remember Mr. Zanjani from 2013, when he was arrested for corruption.

In better times:

Now:

As PressTV reported at the time, “after sanctions were imposed against the National Iranian Oil Company, Iran had to export oil and they gave Babak Zanjani the task of exporting some of this oil worth around USD 3.0003 billion. The problem is that they were supposed to get collateral from him by law and this was not done.”

We asked: “So, Zanjani was tasked to circumvent oil sanctions which he did for over a year, but now, for some inexplicable reason, he is arrested for not ‘getting collateral’?

We suggested at the time that perhaps the US put pressure on Iran to arrest Zanjani in exchange for some manner of sanctions relief and we’ll probably (scratch that, “definitely”) never know the whole story, but the official line now is that he embezzled $2.7 billion from the state-run National Iranian Oil Co.

“The court found enough evidence to convict Zanjani and two other people, who were also sentenced to death,” Bloomberg reports, adding that “Zanjani, who has denied all wrongdoing, was accused of embezzling $2.7 billion from the state-run National Iranian Oil Co. during transactions intended to circumvent international sanctions on crude exports.”

(Zanjani arrives for court in November)

As you can imagine, being tasked with helping a country evade international sanctions might tempt one to skim a little off the top which is exactly what Zanjani is accused of doing via the Tajikistan branch of his own bank, First Islamic Investment Bank.

But here’s the (politically) interesting part: “The embezzlement occurred under the presidency of Mahmoud Ahmadinejad [but Zanjani] was arrested in December 2013 after the election of President Hassan Rouhani.”

Bloomberg continues: “Zanjani was known to have good contacts with Iran’s Revolutionary Guards, and the decision marks a political and economic “confrontation” within Iran’s political establishment between the legacy of Ahmadinejad and the new era of Rouhani.”

So it would appear that we may have been right three years ago. Is it possible that Rouhani made a deal with the US as part of the sanctions relief to rid the world of this petrogold peddler on the excuse he embezzled money from his own country?

In other words, was Zanjani simply a casualty of the Nuclear Accord and was he summarily abandoned by the Ayatollah and the IRGC for reasons of geopolitical expediency?

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Oliver Wright is an international lawyer, financier, and published author. He is the Founder and CEO of Vanquish Merchant Bank. His writings appear in journals such as the Harvard Journal of International Press-Politics. For six years Oliver was an international litigator and corporate attorney practicing cross-border mergers and acquisitions at Gibson, Dunn & Crutcher, the top ranked litigation firm in the country. Oliver Wright holds dual Master and Doctor of Law degrees in International and Comparative Law from Cornell Law School, where he graduated with honors and was Editor of the Cornell Law Review. He was class major valedictorian at UCLA, where he graduated summa cum laude, phi beta kappa with a BA in Communications Studies.